Editing 78-08-A6 (section)

=== Transcript ===
In 1976 during the primary campaign in California I had been talking about the
failure of Congress to do anything constructive about the "energy crisis". Oh Congress
had done something but it couldn't be called constructive; The energy bill they came
up with didn't encourage the increased production of oil by a single barrel. In fact
scores of rigs drilling oil had closed down all over the country.

One day I was invited to visit an oil field in the Long Beach harbor area. The
reason for the invitation? - Every well was closed down. Thousands of barrels of oil
not being pumped because our government had set a wellhead price on those wells of
$4.50 a barrel and it costs more than $4.50 to bring that oil to the surface.

But standing there in the midst of those silent pumps we could look across a pier
and see a Japanese tanker unloading Arab oil at $13.50 a barrel. Well, a few days ago
I ran into the gentleman who had invited me to that oil field two years ago. He told
me those hundreds of pumps are still closed down because our government price ceiling
is still $4.50. and the cost of pumping oil is six. So each and every day 37,000 barrels
of oil have to be replaced by that high-priced Arab oil. Since my visit two years ago
the total is more than 27 million barrels of oil we could have had for the pumping.

In 1973 at the time of the embargo we had only been importing 23 percent of our
oil; now it's 47 percent. The administration has told us we must learn to conserve
and thus reduce the amount of oil we have to import. Well economists have it figured
out that for every 5 percent increase in price we allow, we'll increase domestic supplies
by one percent. They also tell us that because we are maintaining our domestic price at
30 percent less than the import price .we are consuming about three million barrels per
day more than we otherwise would. Now add three million barrels we'd save if the price
were allowed to go higher and two million barrels more per day we'd pump domestically
if the price were higher and you have a five million barrel a day reduction in our
imports. At $13.50 a barrel that just about wipes out the deficit in our balance of
trade.

I know that's a lot of arithmetic to absorb by radio, especially if you are driving.
But when you stop to think that gasoline at our present rate of inflation will rise by
82 percent over the next five years if that inflation rate continues and food will only
go up 54 percent it makes you wonder why government has such a blind spot with regard
to oil and natural gas. 

This is Ronald Reagan.

Thanks for listening.
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